Letter of the Day | Jamaica should once again dollarise the national currency

Most Jamaicans are much too young to realise that the only extended period of time in which we operated a stable currency, was when we were dollarised. Yes, we were dollarised for 129 years, up until 1969 when we converted the Jamaican pound to the Jamaican dollar. ‘Dollarisation’ is the term for when a foreign currency is used in addition to, or instead of, the domestic currency as legal tender.

The official currency of Jamaica between 1840 and 1969 was the Jamaican pound. The Jamaican pound, during that period, was used interchangeably alongside the British currency (notes and coins) and was equal to the British pound in value.

The dependent islands of Cayman Islands and Turks and Caicos Islands also used Jamaican pounds; they, too, were dollarised by virtue of using Jamaican currency.

So Jamaica was dollarised until 1969, when we converted from essentially the pound sterling and the Jamaica pound notes along with British coinage, to the Jamaican dollar.

On January 30, 1968, the Jamaican House of Representatives voted to decimalise the currency by introducing the dollar, worth 10 shillings, to replace the Jamaican pound.

Coins and banknotes went into circulation on September 8, 1969.

At the date of decimalisation on September 8, 1969, one Jamaican pound, or simply £1.00, was equivalent to US$2.38.

Had Jamaica decimalised at the same time as Britain in 1971, and retained the tie to the British pound (remained dollarised), one Jamaican pound, or simply £1.00, as at June 10, 2019, would be equivalent to US$1.27 at today’s rate of exchange. On December 31, 1971, US$1.00 was equal to J$0.77. As at May 31, 2019, US$1.00 equals J$133.50. The figures speak for themselves. We have not managed our currency very well since we de-dollarised in 1969.

IMMENSELY BETTER OFF

Please allow me to state the obvious: we were immensely better off when we were dollarised, and using the Jamaican and British pounds.

The pound sterling is currently officially used in the United Kingdom and nine territories, and unofficially in at least three countries.

The majority of small countries, such as Jamaica, and even some that are much larger, and trying to operate their own currency without it being tied to a strong reserve currency, has an inherent problem of frequent devaluations and high inflation.

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Jamaica should once again dollarise the national currency, but this time around, we should use the US dollar instead of the pound sterling.

After all, Britannia no longer rules the waves. The US dollar is the preferred currency for international trade because it is one of the least volatile and thus less prone to a sudden depreciation.

The US Dollar Index 2002-2019 shows the dollar is up 21 per cent since mid-2011.